Asia stocks mostly up, dollar edges lower

HONG KONG: Most Asian markets advanced on Friday on a healthy batch of economic growth data out of the United States but Shanghai sank again, extending the previous day’s sell-off.

The dollar ticked up, with analysts tipping further gains on expectations for a Federal Reserve interest rate rise as soon as September.

Tokyo reversed morning losses to end 0.30 percent higher, adding 62.41 points to 20,585.24, while Sydney was up 0.52 percent, or 29.68 points, at 5,699.2 and Seoul gained 0.55 percent, or 11.13 points, to 2,030.16.

Hong Kong was 0.56 percent higher, adding 138.30 points to 24,636.28, while Shanghai ended down 1.13 percent, or 42.04 points, at 3,663.73 as it struggles to recover from a recent plunge.

Confidence was given a shot in the arm by a report from the US Commerce Department
Thursday that said the world’s top economy expanded at an annual rate of 2.3 percent in the April-June period, the strongest growth since the third quarter of 2014.

And while the figure was a little below expectations, the department also revised up its estimate on the first quarter of the year—which was hit by severe winter weather—to growth of 0.6 percent, from a 0.2-percent contraction.

However, on Wall Street the Dow and S&P 500 were marginally lower while the Nasdaq rose 0.35 percent.

The news increased the likelihood the Fed will lift rates sooner rather than later.

The dollar dipped Friday to 124.23 yen from 124.15 in New York but Imre Speizer, a senior market strategist at Westpac Banking Corp. in Auckland, tipped it to strengthen down the line.

“The US dollar remains supported by the looming Fed tightening cycle,” Speizer said. “As we get closer to that date and get possible clues from speeches by officials over the next few weeks, I expect the dollar to auto-resume its upward trend.”

Japan stimulus

In other forex trade, the euro bought $1.0938 and 135.89 yen against $1.0931 and 135.70 yen in New York.

The yen managed to hold up against the greenback despite another round of soft inflation
data out of Japan that has fanned talk of more monetary easing by the country’s central bank.

The internal affairs ministry said household spending fell 2.0 percent year-on-year in June against market expectations for an increase after a rise of 4.8 percent in May.

Core inflation, excluding volatile fresh food prices, was up 0.1 percent, well short of the Bank of Japan’s 2.0-percent target.

Yasunari Ueno, chief market economist at Mizuho Securities, said: “I can’t see when the BoJ will be able reach the 2.0 percent inflation target at all.

“It appears to be a matter of time before the BoJ adds monetary stimulus.”
Shanghai stocks continue to be buffeted as government measures at the start of the month to contain a plunge were unable to prevent another round of fierce selling this week.

The benchmark index slumped more than 30 percent between June 12 and July 8, when Beijing unveiled a series of strict measures to avert a meltdown, which prompted a slight recovery.

However, a below-forecast manufacturing reading last Friday sparked another round of panic—sending shares collapsing 8.48 percent Monday—among mainland investors. The market is now down 14 percent over the month. AFP

On Friday China’s two stock exchanges put trading limits on more than 20 accounts as the market regulator announced a crackdown on computerized “program trading,” which it blamed for the recent volatility.

The China Securities Regulatory Commission (CSRC) said it was investigating institutions and individuals for program trading, which had amplified “big fluctuations” on the stock market, according to a statement on its website.

On oil markets, US benchmark West Texas Intermediate for September delivery fell 58 cents to $47.96 and Brent crude for September shed 35 cents to $52.96 a barrel in afternoon trade.

Gold fetched $1,082.98 an ounce compared with $1,086.80 late Thursday.